Acquiring new customers can be expensive for digital marketers. The cost per acquisition (CPA) is a critical metric for businesses of all sizes, as it directly impacts profitability. A high CPA can eat into your margins and make it difficult to grow your business.
That’s why it’s essential to find ways to reduce your CPA. By doing so, you can stretch your marketing budget further, reach more qualified leads, and convert them into paying customers at a lower cost.
In this article, we’ll share seven simple tips that you can use to reduce your CPA. These tips are easy to implement and can make a big difference in your bottom line.
What Is Cost Per Acquisition?
CPA is a marketing metric that measures the average cost of acquiring a new customer. To calculate cost per acquisition, divide your total marketing spend by the number оf new customers acquired during a specific period.
For example, if you spend $10,000 оn marketing and acquire 100 new customers, your CPA would be $100.
What’s a good CPA? The answer depends on your industry. In the tech space, the average CPA is $182. In travel, however, it’s just $7.
Why Is It Important to Reduce Your CPA?
There are several reasons why it’s essential to reduce your CPA:
- Improved profitability: When you reduce your CPA, you improve your profitability. This is because you’re spending less money to acquire each new customer.
- Increased ROI: Reducing your CPA also increases your return оn investment (ROI) оn your marketing spend. This is because you’re getting more value out оf each marketing dollar.
- Sustainable growth: A low CPA makes it easier to scale your business sustainably. This is because you can acquire new customers without breaking the bank.
7 Simple Tips to Reduce Your CPA
Now that we’ve covered the basics оf CPA, let’s share seven simple tips. Stretch your marketing budget by using these strategies to lower your costs per acquisition and grow your business.
1. Prioritize Your Audience
One of the best ways to reduce your CPA is to focus your marketing efforts on a niche audience. When you target a specific group of people, you can create more relevant and effective marketing campaigns. In practice, personalization can cut CPA costs by 50%.
For example, you can tailor your ad copy to resonate with an audience’s pain points. This will lead to higher conversion rates and lower CPA.
Take action: Dive deep into demographics, interests, and pain points. Conduct surveys, analyze website traffic, and join relevant online communities to truly understand your ideal customer. You could even try careful negative keyword selections like ‘comparison’ and ‘reviews’ to appeal to potential customers who are still on the fence.
2. Retarget Customers
Bringing back existing customers is often easier and cheaper than acquiring new ones. That’s why retargeting is such a powerful tool for reducing CPA.
You can retarget customers who have abandoned their carts, visited your website but didn’t convert, оr signed up for your email list but haven’t made a purchase using Google ads, Facebook ads, and other online advertising networks.
Take action: Craft personalized email sequences and optimize your ads based on customer behaviour by curating ad groups.
3. Improve Customer Retention
Repeat customers are your best customers. That’s why it’s important to focus on improving customer retention. By providing excellent customer service and offering loyalty programs, you can encourage customers to come back for more.
Take action: Reward loyalty with tiered programs offering early access to sales, exclusive product features, or personalized birthday gifts. Go beyond transactions and build genuine relationships through customer success programs or dedicated support channels.
4. Create Content and Assess Effectiveness
Content marketing is a great way to attract new customers, strengthen relationships, and reduce your CPA.
By creating high-quality content that your target audience will find valuable, you can establish yourself as an expert in your industry and build trust with potential customers.
Take action: Analyze content performance beyond just views and click-through rates. Create search terms reports and track conversions, shares, and engagement metrics to identify high-performing topics and formats. Conduct user surveys to get direct feedback on the value your content delivers.
5. A/B Test and Optimize Your Website
Conversion rate optimization (CRO) is the process of improving your website to convert more visitors into customers. One of the best ways to do this is through A/B testing.
A/B testing allows you to test different versions of your website to see which one performs better.
Take action: Don’t limit testing to just headlines, buttons, and landing pages. Experiment with different website layouts, navigation structures, and even checkout processes. Use heatmaps and user recordings to understand where visitors drop off and optimize the conversion journey.
6. Streamline the Sales Funnel
Your sales funnel is the process that leads potential customers from awareness to purchase. If your sales funnel is too complex, it can discourage customers from converting. Streamlining your sales funnel can make it easier for customers to buy from you.
Take action: Identify unnecessary steps and eliminate friction points. Offer guest checkout options, simplify forms, and provide clear calls to action at every stage. Implement live chat to answer questions, and guide customers through the purchase process. You could also allocate leads a quality score and focus your resources on optimizing and tailoring the sales funnel for those more likely to buy.
7. Take Advantage оf Marketing Automation
Marketing automation can help you streamline your marketing efforts and save time. By using marketing automation tools, you can automate tasks such as email marketing, social media marketing, and lead nurturing. Examples include Mailchimp for email automation, Hootsuite for scheduling and managing posts across various social media platforms, and HubSpot for nurturing leads through the sales funnel.
Take action: Automate repetitive tasks to focus your energy on strategic initiatives like campaign analysis, content creation, and building valuable partnerships.
Reduce Your CPA tо Maximize Your Marketing Budget
By following these seven simple tips, you can reduce your CPA and improve the ROI оf your marketing spend. This will allow you to stretch your marketing budget further, reach more qualified leads, and convert them into paying customers at a lower cost.
Remember, reducing your CPA is a continuous process. It’s important to track your results and make adjustments to your marketing campaigns as needed.
Unsure which CPA strategies are right for your audience? Schedule a chat with our marketing team today.